European stocks rally after Fed, ECB news

JosieCox

NEW YORK (MarketWatch) — European stock markets moved sharply higher on Thursday, supported by low-rate reassurance from the U.S. Federal Reserve and hopes for a quantitative-easing program in the eurozone.

Investors also focused on the Scottish independence referendum, although the final result is not expected until early Friday morning.

Market reaction: The pound
GBPUSD, -0.0954%
climbed to $1.6368 ahead of the Scotland result, up 0.6% from Wednesday according to FactSet. The U.K.’s FTSE 100 index
UKX, +0.33%
gained 0.6% to close at 6,819.29.

The pan-European Stoxx Europe 600 index
SXXP, +0.97%
advanced 1% to 347.78, its highest close in early September.

QE hopes: The European Central Bank said eurozone banks borrowed 82.6 billion euros ($106.9 billion) through the first round of the targeted long-term refinancing operation (TLTRO), falling significantly short of market expectations. With the uptake on the weaker side, analysts suggested that the ECB now is closer to launching a full-scale QE program. Read: European Central Bank gets another shove toward QE

“The fact that this TLTRO was so poorly subscribed, [will] put further pressure on the ECB to use additional tools to facilitate the economy“ said Lee Mumford, financial trader at Spreadex.

Scotland referendum: In the U.K., everyone was looking north as the Scots headed for the polls to vote on the country’s independence. The polls have suggested that the race is neck to neck, causing turbulence in financial markets. A survey from pollster YouGov Thursday morning gave pro-union support a narrow lead, showing 49% of the 3,000 people polled between Monday and Wednesday want to keep Scotland in the union and 45% support independence. The rest were undecided or didn’t know, YouGov said.

The polling stations close at 10 p.m. London time, or 5 p.m. Eastern Time, and the final result is expected Friday morning around 7 a.m. London time.

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